BILL NUMBER: AB 659	CHAPTERED  09/24/00

	CHAPTER   601
	FILED WITH SECRETARY OF STATE   SEPTEMBER 24, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 23, 2000
	PASSED THE SENATE   AUGUST 31, 2000
	PASSED THE ASSEMBLY   AUGUST 31, 2000
	AMENDED IN SENATE   AUGUST 29, 2000
	AMENDED IN SENATE   JUNE 22, 1999
	AMENDED IN ASSEMBLY   MAY 28, 1999
	AMENDED IN ASSEMBLY   APRIL 22, 1999
	AMENDED IN ASSEMBLY   APRIL 5, 1999

INTRODUCED BY   Assembly Member Wiggins
   (Coauthor:  Senator Chesbro)

                        FEBRUARY 23, 1999

   An act to amend Sections 214 and 237 of, and to add Section 230
to, the Revenue and Taxation Code, relating to taxation, to take
effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 659, Wiggins.    Property tax exemptions.
   The California Constitution authorizes the Legislature to classify
personal property for differential taxation or for exemption by
means of a statute approved by a 2/3 vote of the membership of each
house.
   This bill would, pursuant to this constitutional authorization,
exempt from those taxes that attach as a lien on or after January 1,
2001, a wooden vessel of historical significance, as defined, and all
personal property thereon used in its operation.
   The California Constitution authorizes the Legislature to exempt
from taxation property that is used exclusively for religious,
hospital, or charitable purposes, and is owned or held in trust by a
nonprofit entity.  Pursuant to this constitutional authority,
existing law exempts from property taxation low-income housing that
is owned and operated by the housing entity of a federally designated
Indian tribe.
   This bill would modify this exemption to instead apply to that
percentage of the value of the property that corresponds to that
portion of the property used for lower income households.  This
modified exemption would require that at least 30% of the housing
units of an exempt property be continuously available to, or occupied
by, lower income households, as defined.
   Pursuant to the same constitutional authority, existing law also
partially exempts from property taxation property used exclusively
for rental housing and related facilities, that is owned by either
any of certain types of nonprofit entities or a veterans organization
that meets exemption requirements, if either of certain qualifying
criteria are met and if, among other things, the owner of the
property certifies and ensures the existence of an enforceable and
verifiable agreement with a public agency, or a recorded deed
restriction, with respect to the property's usage.
   This bill would apply this latter requirement exclusively to any
claim for this partial exemption for the 2000-01 fiscal year or any
fiscal year thereafter, and, except in the case of a limited
partnership in which the managing general partner is a nonprofit
corporation eligible for the exemption, allow the requirement to be
met in a legal document other than an agreement with a public agency
or a recorded deed restriction.  This bill would, except in the case
of a limited partnership in which the managing general partner is a
nonprofit corporation eligible for the exemption, also establish, as
an additional qualifying criterion for the partial exemption for the
2000-01 fiscal year or any fiscal year thereafter, the occupancy of
90% or more of the property by lower income households whose rent
does not exceed that rent prescribed by a specified statute.  This
bill would, with regard to a single property or multiple properties,
limit to $20,000 of taxes the total exemption amount that may be
allowed to a taxpayer for any fiscal year on the sole basis of the
application of this additional criterion.
   Section 2229 of the Revenue and Taxation Code requires the
Legislature to reimburse local agencies annually for certain property
tax revenues lost as a result of any exemption or classification of
property for purposes of ad valorem property taxation.
   This bill would provide that, notwithstanding Section 2229 of the
Revenue and Taxation Code, no appropriation is made and the state
shall not reimburse local agencies for property tax revenues lost by
them pursuant to the bill.
   This bill would take effect immediately as a tax levy.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 214 of the Revenue and Taxation Code is amended
to read:
   214.  (a) Property used exclusively for religious, hospital,
scientific, or charitable purposes owned and operated by community
chests, funds, foundations or corporations organized and operated for
religious, hospital, scientific, or charitable purposes is exempt
from taxation, including ad valorem taxes to pay the interest and
redemption charges on any indebtedness approved by the voters prior
to July 1, 1978, or any bonded indebtedness for the acquisition or
improvement of real property approved on or after July 1, 1978, by
two-thirds of the votes cast by the voters voting on the proposition,
if:
   (1) The owner is not organized or operated for profit.  However,
in the case of hospitals, the organization shall not be deemed to be
organized or operated for profit if, during the immediately preceding
fiscal year, operating revenues, exclusive of gifts, endowments and
grants-in-aid, did not exceed operating expenses by an amount
equivalent to 10 percent of those operating expenses.  As used
herein, operating expenses include depreciation based on cost of
replacement and amortization of, and interest on, indebtedness.
   (2) No part of the net earnings of the owner inures to the benefit
of any private shareholder or individual.
   (3) The property is used for the actual operation of the exempt
activity, and does not exceed an amount of property reasonably
necessary to the accomplishment of the exempt purpose.
   (A) For the purposes of determining whether the property is used
for the actual operation of the exempt activity, consideration shall
not be given to use of the property for either or both of the
following described activities if that use is occasional:
   (i) The owner conducts fundraising activities on the property and
the proceeds derived from those activities are not unrelated business
taxable income, as defined in Section 512 of the Internal Revenue
Code, of the owner and are used to further the exempt activity of the
owner.
   (ii) The owner permits any other organization that meets all of
the requirements of this subdivision, other than ownership of the
property, to conduct fundraising activities on the property and the
proceeds derived from those activities are not unrelated business
taxable income, as defined in Section 512 of the Internal Revenue
Code, of the organization, are not subject to the tax on unrelated
business taxable income that is imposed by Section 511 of the
Internal Revenue Code, and are used to further the exempt activity of
the organization.
   (B) For purposes of subparagraph (A):
   (i) "Occasional use" means use of the property on an irregular or
intermittent basis by the qualifying owner or any other qualifying
organization described in clause (ii) of subparagraph (A) that is
incidental to the primary activities of the owner or the other
organization.
   (ii) "Fundraising activities" means both activities involving the
direct solicitation of money or other property and the anticipated
exchange of goods or services for money between the soliciting
organization and the organization or person solicited.
   (C) Subparagraph (A) shall have no application in determining
whether paragraph (3) has been satisfied unless the owner of the
property and any other organization using the property as provided in
subparagraph (A) have filed with the assessor duplicate copies of
valid unrevoked letters or rulings from the Internal Revenue Service
that state that the owner and the other organization qualify as
exempt organizations under Section 501(c)(3) of the Internal Revenue
Code.  The owner of the property and any other organization using the
property as provided in subparagraph (A) also shall file duplicate
copies of their most recently filed federal income tax returns.
   (D) For the purposes of determining whether the property is used
for the actual operation of the exempt activity, consideration shall
not be given to the use of the property for meetings conducted by any
other organization if the meetings are incidental to the other
organization's primary activities, are not fundraising meetings or
activities as defined in subparagraph (B), are held no more than once
per week, and the other organization and its use of the property
meet all other requirements of paragraphs (1) to (5), inclusive, of
subdivision (a).  The owner or the other organization also shall file
with the assessor duplicate copies of valid, unrevoked letters or
rulings from the Internal Revenue Service or the Franchise Tax Board
stating that the other organization, or the national organization of
which it is a local chapter or affiliate, qualifies as an exempt
organization under Section 501(c)(3) or Section 501(c)(4) of the
Internal Revenue Code or Section 23701d, 23701f, or 23701w, together
with duplicate copies of that organization's most recently filed
federal income tax return, if the organization is required by federal
law to file a return.
   Nothing in subparagraph (A), (B), (C), or (D) shall be construed
to either enlarge or restrict the exemption provided for in
subdivision (b) of Section 4 and Section 5 of Article XIII of the
California Constitution and this section.
   (4) The property is not used or operated by the owner or by any
other person so as to benefit any officer, trustee, director,
shareholder, member, employee, contributor, or bondholder of the
owner or operator, or any other person, through the distribution of
profits, payment of excessive charges or compensations, or the more
advantageous pursuit of their business or profession.
   (5) The property is not used by the owner or members thereof for
fraternal or lodge purposes, or for social club purposes except where
that use is clearly incidental to a primary religious, hospital,
scientific, or charitable purpose.
   (6) The property is irrevocably dedicated to religious,
charitable, scientific, or hospital purposes and upon the
liquidation, dissolution or abandonment of the owner will not inure
to the benefit of any private person except a fund, foundation, or
corporation organized and operated for religious, hospital,
scientific, or charitable purposes.
   (7) The property, if used exclusively for scientific purposes, is
used by a foundation or institution that, in addition to complying
with the foregoing requirements for the exemption of charitable
organizations in general, has been chartered by the Congress of the
United States (except that this requirement shall not apply when the
scientific purposes are medical research), and whose objects are the
encouragement or conduct of scientific investigation, research, and
discovery for the benefit of the community at large.
   The exemption provided for herein shall be known as the "welfare
exemption."  This exemption shall be in addition to any other
exemption now provided by law, and the existence of the exemption
provision in paragraph (2) of subdivision (a) of Section 202 shall
not preclude the exemption under this section for museum or library
property.  Except as provided in subdivision (e), this section shall
not be construed to enlarge the college exemption.
   (b) Property used exclusively for school purposes of less than
collegiate grade and owned and operated by religious, hospital, or
charitable funds, foundations, or corporations, which property and
funds, foundations, or corporations meet all of the requirements of
subdivision (a), shall be deemed to be within the exemption provided
for in subdivision (b) of Section 4 and Section 5 of Article XIII of
the California Constitution and this section.
   (c) Property used exclusively for nursery school purposes and
owned and operated by religious, hospital, or charitable funds,
foundations, or corporations, which property and funds, foundations,
or corporations meet all the requirements of subdivision (a), shall
be deemed to be within the exemption provided for in subdivision (b)
of Section 4 and Section 5 of Article XIII of the California
Constitution and this section.
   (d) Property used exclusively for a noncommercial educational FM
broadcast station or an educational television station, and owned and
operated by religious, hospital, scientific, or charitable funds,
foundations, or corporations meeting all of the requirements of
subdivision (a), shall be deemed to be within the exemption provided
for in subdivision (b) of Section 4 and Section 5 of Article XIII of
the California Constitution and this section.
   (e) Property used exclusively for religious, charitable,
scientific, or hospital purposes and owned and operated by religious,
hospital, scientific, or charitable funds, foundations, or
corporations or educational institutions of collegiate grade, as
defined in Section 203, which property and funds, foundations,
corporations, or educational institutions meet all of the
requirements of subdivision (a), shall be deemed to be within the
exemption provided for in subdivision (b) of Section 4 and Section 5
of Article XIII of the California Constitution and this section.  As
to educational institutions of collegiate grade, as defined in
Section 203, the requirements of paragraph (6) of subdivision (a)
shall be deemed to be met if both of the following are met:
   (1) The property of the educational institution is irrevocably
dedicated in its articles of incorporation to charitable and
educational purposes, to religious and educational purposes, or to
educational purposes.
   (2) The articles of incorporation of the educational institution
provide for distribution of its property upon its liquidation,
dissolution, or abandonment to a fund, foundation, or corporation
organized and operated for religious, hospital, scientific,
charitable, or educational purposes meeting the requirements for
exemption provided by Section 203 or this section.
   (f) Property used exclusively for housing and related facilities
for elderly or handicapped families and financed by, including, but
not limited to, the federal government pursuant to Section 202 of
Public Law 86-372 (12 U.S.C. Sec. 1701q), as amended, Section 231 of
Public Law 73-479 (12 U.S.C. Sec. 1715v), Section 236 of Public Law
90-448 (12 U.S.C. Sec.  1715z), or Section 811 of Public Law 101-625
(42 U.S.C. Sec. 8013), and owned and operated by religious, hospital,
scientific, or charitable funds, foundations, or corporations
meeting all of the requirements of this section shall be deemed to be
within the exemption provided for in subdivision (b) of Section 4
and Section 5 of Article XIII of the California Constitution and this
section.
   The amendment of this paragraph made by Chapter 1102 of the
Statutes of 1984 does not constitute a change in, but is declaratory
of, the existing law.  However, no refund of property taxes shall be
required as a result of this amendment for any fiscal year prior to
the fiscal year in which the amendment takes effect.
   Property used exclusively for housing and related facilities for
elderly or handicapped families at which supplemental care or
services designed to meet the special needs of elderly or handicapped
residents are not provided, or that is not financed by the federal
government pursuant to Section 202 of Public Law 86-372 (12 U.S.C.
Sec. 1701q), as amended, Section 231 of Public Law 73-479 (12 U.S.C.
Sec. 1715v), Section 236 of Public Law 90-448 (12 U.S.C.  Sec.
1715z), or Section 811 of Public Law 101-625 (42 U.S.C. Sec. 8013),
shall not be entitled to exemption pursuant to this subdivision
unless the property is used for housing and related facilities for
low- and moderate-income elderly or handicapped families.  Property
that would otherwise be exempt pursuant to this subdivision, except
that it includes some housing and related facilities for other than
low- or moderate-income elderly or handicapped families, shall be
entitled to a partial exemption.  The partial exemption shall be
equal to that percentage of the value of the property that is equal
to the percentage that the number of low- and moderate-income elderly
and handicapped families occupying the property represents of the
total number of families occupying the property.
   As used in this subdivision, "low and moderate income" has the
same meaning as the term "persons and families of low or moderate
income" as defined by Section 50093 of the Health and Safety Code.
   (g) (1) Property used exclusively for rental housing and related
facilities and owned and operated by religious, hospital, scientific,
or charitable funds, foundations, or corporations, including limited
partnerships in which the managing general partner is an eligible
nonprofit corporation, meeting all of the requirements of this
section, or by veterans' organizations, as described in Section
215.1, meeting all the requirements of paragraphs (1) to (7),
inclusive, of subdivision (a), shall be deemed to be within the
exemption provided for in subdivision (b) of Section 4 and Section 5
of Article XIII of the California Constitution and this section and
shall be entitled to a partial exemption equal to that percentage of
the value of the property that the portion of the property serving
lower income households represents of the total property in any year
in which either of the following criteria applies:
   (A) The acquisition, rehabilitation, development, or operation of
the property, or any combination of these factors, is financed with
tax-exempt mortgage revenue bonds or general obligation bonds, or is
financed by local, state, or federal loans or grants and the rents of
the occupants who are lower income households do not exceed those
prescribed by deed restrictions or regulatory agreements pursuant to
the terms of the financing or financial assistance.
   (B) The owner of the property is eligible for and receives
low-income housing tax credits pursuant to Section 42 of the Internal
Revenue Code of 1986, as added by Public Law 99-514.
   (C) In the case of a claim, other than a claim with respect to
property owned by a limited partnership in which the managing general
partner is an eligible nonprofit corporation, that is filed for the
2000-01 fiscal year or any fiscal year thereafter, 90 percent or more
of the occupants of the property are lower income households whose
rent does not exceed the rent prescribed by Section 50053 of the
Health and Safety Code.  The total exemption amount allowed under
this subdivision to a taxpayer, with respect to a single property or
multiple properties for any fiscal year on the sole basis of the
application of this subparagraph, may not exceed twenty thousand
dollars ($20,000) of tax.
   (2) In order to be eligible for the exemption provided by this
subdivision, the owner of the property shall do both of the
following:
   (A) (i) For any claim filed for the 2000-01 fiscal year or any
fiscal year thereafter, certify and ensure, subject to the limitation
in clause (ii), that there is an enforceable and verifiable
agreement with a public agency or, a recorded deed restriction, or
other legal document that restricts the project's usage and that
provides that the units designated for use by lower income households
are continuously available to or occupied by lower income households
at rents that do not exceed those prescribed by Section 50053 of the
Health and Safety Code, or, to the extent that the terms of federal,
state, or local financing or financial assistance conflicts with
Section 50053, rents that do not exceed those prescribed by the terms
of the financing or financial assistance.
   (ii) In the case of a limited partnership in which the managing
general partner is an eligible nonprofit corporation, the restriction
and provision specified in clause (i) shall be contained in an
enforceable and verifiable agreement with a public agency, or in a
recorded deed restriction to which the limited partnership certifies.

   (B) Certify that the funds that would have been necessary to pay
property taxes are used to maintain the affordability of, or reduce
rents otherwise necessary for, the units occupied by lower income
households.
   (3) As used in this subdivision, "lower income households" has the
same meaning as the term "lower income households" as defined by
Section 50079.5 of the Health and Safety Code.
   (h) Property used exclusively for an emergency or temporary
shelter and related facilities for homeless persons and families and
owned and operated by religious, hospital, scientific, or charitable
funds, foundations, or corporations meeting all of the requirements
of this section shall be deemed to be within the exemption provided
for in subdivision (b) of Section 4 and Section 5 of Article XIII of
the California Constitution and this section.  Property that
otherwise would be exempt pursuant to this subdivision, except that
it includes housing and related facilities for other than an
emergency or temporary shelter, shall be entitled to a partial
exemption.
   As used in this subdivision, "emergency or temporary shelter"
means a facility that would be eligible for funding pursuant to
Chapter 11 (commencing with Section 50800) of Part 2 of Division 31
of the Health and Safety Code.
   (i) Property used exclusively for housing and related facilities
for employees of religious, charitable, scientific, or hospital
organizations that meet all the requirements of subdivision (a) and
owned and operated by funds, foundations, or corporations that meet
all the requirements of subdivision (a) shall be deemed to be within
the exemption provided for in subdivision (b) of Sections 4 and 5 of
Article XIII of the California Constitution and this section to the
extent the residential use of the property is institutionally
necessary for the operation of the organization.
   (j) For purposes of this section, charitable purposes include
educational purposes.  For purposes of this subdivision, "educational
purposes" means those educational purposes and activities for the
benefit of the community as a whole or an unascertainable and
indefinite portion thereof, and shall not include those educational
purposes and activities that are primarily for the benefit of an
organization's shareholders.  Educational activities include the
study of relevant information, the dissemination of that information
to interested members of the general public, and the participation of
interested members of the general public.
  SEC. 2.  Section 230 is added to the Revenue and Taxation Code, to
read:
   230.  (a) With regard to taxes that attach as a lien on or after
January 1, 2001, wooden vessels of historical significance, and all
personal property thereon used in their operation, are exempt from
taxation.  This exemption applies if all of the following conditions
are satisfied:
   (1) The owner and operator is a nonprofit organization that has
qualified for exemption under either Section 23701d of this code or
under Section 501(c)(3) of the Internal Revenue Code.
   (2) No part of the net earnings of the owner inures to the benefit
of any private shareholder or individual.
   (3) The vessel is used primarily as, or as a part of, a maritime
museum that is regularly open to the public.
   (4) Income from fundraising use and use for charter activities
does not exceed 40 percent of operating revenues of the vessel, and
all net earnings are used to further the exempt activity of the
museum.
   (b) When claiming an exemption pursuant to this section, a
claiming organization shall give all information required and answer
all questions in an affidavit, to be furnished by the assessor, that
is signed by the claimant under penalty of perjury.  The assessor may
require other proof of the facts stated in the affidavit before
allowing the exemption.  A claimant for an exemption pursuant to this
section is subject to Sections 255 and 260.
   (c) For purposes of this section, the following definitions apply:

   (1) "Wooden vessel of historical significance" means any wooden
vessel that is a refurbished original, wooden inland waters vessel of
47 feet or larger, built in California during or prior to 1910, that
continuously thereafter has remained in California waters, and that
has been designated a California State Historical Landmark.
   (2) "Regularly open to the public" means that the museum was open
to the public not less than 20 hours per week for not less than 35
weeks of the 12-month period immediately preceding the lien date for
the year for which the exemption is claimed.
  SEC. 3.  Section 237 of the Revenue and Taxation Code is amended to
read:
   237.  (a) (1) Subject to the requirements set forth in paragraph
(2), there is exempt from taxation under this part that portion of
the assessed value of property, owned and operated by a federally
designated Indian tribe or its tribally designated housing entity ,
that corresponds to that portion of the property that is continuously
available to, or occupied by, lower income households, as defined in
Section 50079.5 of the Health and Safety Code at rents that do not
exceed those prescribed by Section 50053 of the Health and Safety
Code, or, to the extent that the terms of federal, state, or local
financing or financial assistance conflict with that section, rents
that do not exceed those prescribed by the terms of the financing
agreements or financial assistance agreements.
   (2) The exemption set forth in subdivision (a) applies only if the
property and entity meet the following requirements:
   (A) At least 30 percent of the property's housing units are either
continuously available to, or occupied by, lower income households,
as defined in Section 50079.5 of the Health and Safety Code, at rents
that do not exceed those prescribed by Section 50053 of the Health
and Safety Code, or, to the extent that the terms of federal, state,
or local financing or financial assistance conflict with that
section, rents that do not exceed those prescribed by the terms of
the financing agreements or financial assistance agreements.
   (B) The housing entity is nonprofit.
   (C) No part of the net earnings of the housing entity inure to the
benefit of any private shareholder or individual.
   (b) In lieu of the tax imposed by this part, a tribe or tribally
designated housing entity may agree to make payments to a county,
city, city and county, or political subdivision of the state for
services, improvements, or facilities provided by that entity for the
benefit of a low-income housing project owned and operated by the
tribe or tribally designated housing entity.  Any payments in lieu of
tax may not exceed the estimated cost to the city, county, city and
county, or political subdivision of the state of the services,
improvements, or facilities to be provided.
   (c) A tribe or tribally designated housing entity applying for an
exemption under this section shall provide the following documents to
the assessor:
   (1) Documents establishing that the designating tribe is federally
recognized.
   (2) Documents establishing that the housing entity has been
designated by the tribe.
   (3) Documents establishing that there is a deed restriction,
agreement, or other legally binding document requiring that the
property be used in compliance with subparagraph (A) of paragraph (2)
of subdivision (a).
  SEC. 4.  Notwithstanding Section 2229 of the Revenue and Taxation
Code, no appropriation is made by this act and the state shall not
reimburse any local agency for any property tax revenues lost by it
pursuant to this act.
  SEC. 5.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.

